Tungsten developer Group 6 Metals (ASX:G6M) is building up to a nameplate production capacity of 400,000 tonnes per annum at its Dolphin Tungsten Mine in Tasmania.
During Q2 2023, the $125.33 million market capitalisation company began commercial concentrate production at the project and sent off the first shipment of ‘high-grade’ tungsten concentrate post-quarter end.
The process plant achieved 70% runtime and processed over 10,000 tonnes of low- to medium-grade ore at an average grade of 0.3% tungsten oxide (WO3), producing about 10 tonnes of saleable tungsten concentrate in late June/early July. Preliminary site assays indicate the concentrate achieved an average grade of 55% tungsten and a maximum of 68% tungsten.
The concentrate was loaded into a container in mid-July 2023 and dispatched for the company’s first concentrate sales, marking another significant milestone for Group 6 Metals.
In Q2 2023, as noted in the company’s June quarterly report released on 31 July 2023, Group 6 Metals’ site team completed commissioning and achieved handover of the process plant to its operations and maintenance team.
The focus for the coming quarter will be on increasing output and optimising performance.
Group 6 notes achieving a production grade that meets contractual offtake specifications, including part of the flow sheet that is unique to Dolphin, means the company has achieved the full-scale confirmation of the flowsheet.
In July, Group 6 Metals began drilling and completed initial seed blasting trials on 25-26 July 2023 prior to starting production blasting in early August. Shortly after, the company says run-of-mine ore is expected to be delivered to the process plant, which will improve the performance of the plant by increasing the ore head grade.
At the Bold Head Mine, Group 6 Metals completed a study to include it in the reserve inventory and projected mine life of Dolphin in Q2 2023.
The proposed operation involves mining the open-cut high-grade remnant before returning to the old underground mine. The mine is scheduled to produce about 100,000tpa over 4.5 years, which is expected to provide additional throughput to the Dolphin Processing Plant, increasing WO3 output ahead of the commencement and transition to the Dolphin underground mining operation. Prefeasibility studies involving the processing of the Bold Head ore through the Dolphin plant later in the mine life provide positive results, with earnings before interest, tax, depreciation, and amortisation (EBITDA) of $56.5 million net present value (NPV) of $14.4 million, and an internal rate of return (IRR) of 51%.
On the corporate side, Group 6 Metals raised $30.7 million through a $27 million placement and a $3.7 million share purchase plan (SPP) during Q2 2023.
Funds under the placement were raised at $0.14 per share, and participants received 2 free options for every 3 new shares subscribed for, exercisable at $0.21 on or before 30 June 2025.
The company says the funds raised through the placement and SPP will strengthen its balance sheet and working capital position as it progresses the initial ramp-up phase ahead of steady-state production, expected in Q3/Q4 2023.
These funds will also accelerate the feasibility studies for the Bold Head mine development, downstream processing, and integration of renewable energy into the current power supply for the mine.
The company closed out the quarter with $9 million cash and $1.9 million in undrawn debt facilities, as of 30 June 2023. This was prior to the company pocketing an extra $4.2 million from its July share purchase plan.
Group 6 Metals is an Australian tungsten developer focused on producing ‘high-grade’ tungsten concentrate at its Dolphin Tungsten Mine on King Island in Tasmania.
Tungsten is a critical mineral used in various applications such as steelmaking, mining, construction, electronics, and defence. Group 6 Metals reports global demand for tungsten is expected to grow ‘significantly’ in the coming years, fuelled by demand from the building, mining, and defence sectors, as well as new applications in the battery and technology sectors.
Write to Harry Mulholland at Mining.com.au
Images: Group 6 Metals Ltd